Optimizing wind farm locations for revenue and reduced electricity costs in deregulated electricity markets

With an increasing share of renewable power in the energy mix, planning of new renewable energy production sites becomes increasingly important. Having geographically highly centralized generation leads to overlapping peaks in generation, which are directly seen in the day-ahead markets as increasing electricity price volatility. By analyzing the impact of added generation on day-ahead prices, optimal sites can be identified that maximize investor revenue and societal savings, helping reduce regional disparities in development. This paper uses wind power estimates based on ERA5 global weather data, together with NordPool price data, to evaluate optimal sites for a new wind farm. The paper discusses the value of dispersed generation and co-planning of future wind farm installations. Cannibalization of the day-ahead market price due to centralized generation is addressed, and it is found that additional wind power capacity in high-capacity areas could cannibalize revenue by 9 €/MWh. The results from the applied methodology show that there are areas where it is possible to generate high revenue while simultaneously providing society great benefit in reduced electricity price for energy users in the day ahead-markets of on average 1.1–1.4 €/MWh over the whole year. • A novel spatially explicit method analyzes the effect of wind power dispersion. • Price cannibalization, societal benefit and revenue were quantified. • Dispersed wind power reduces price volatility and cuts electricity costs. • New wind power capacity could reduce electricity price by 1.1–1.4 €/MWh. • Adding new wind power in high-capacity areas cuts day-ahead revenue by 9 €/MWh.